Mo. Code Regs. tit. 10 § 20-4.040

Current through Register Vol. 49, No. 21, November 1, 2024.

Section 10 CSR 20-4.040 - Clean Water State Revolving Fund General Assistance Regulation

PURPOSE: This rule sets forth requirements for the implementation of Title VI of the Federal Water Pollution Control Act, as amended, which authorizes the administrator of the Environmental Protection Agency to make capitalization grants to states for financing the Clean Water State Revolving Fund Program.

PUBLISHER'S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here.

(1) Applicability. This rule defines the minimum requirements which apply to all recipients of assistance under the Clean Water State Revolving Fund Program. Recipients of assistance are subject to the requirements of this regulation, unless otherwise specified. The recipient must satisfy more stringent requirements, if required to do so by applicable federal laws, regulations, or guidance and state or local statutes, policies, rules, ordinances, orders, or loan documentation. The Code of Federal Regulations referenced in the regulation are incorporated as published July 1, 2017. The regulations are incorporated by reference without any later amendments or modifications. To obtain a copy, contact the U.S. Government Printing Office at 732 North Capitol Street, N W, Washington D.C., 20401, toll free at (866) 512-1800 or by visiting https://bookstore.gpo.gov. To obtain the decennial median household income visit the U.S. Census Bureau American Fact Finder webpage https://factfinder.census.gov/faces/nav/jsf/pages/community_facts.xhtml, contact the U.S. Census Bureau, 4600 Silver Hill Road, Suitland, MD 20746, or toll free at (800) 923-8282.

(2) Definitions. The definitions of terms for 10 CSR 20-4.040-10 CSR 20-4.050 are contained in 10 CSR 20-2.010 and subsections (2)(A)-(N) of this rule.

(A) Assistance-The types of financial assistance allowed pursuant to 33 U.S.C. 1383(d)(1)-(5).

(B) Clean Water State Revolving Fund (CWSRF)-The financial assistance program authorized by Title VI of the Federal Water Pollution Control Act.

(C) Debt service-The costs associated with amortizing loans. These costs include interest charges, penalty charges, and repayment of principal.

(D) EIERA-State Environmental Improvement and Energy Resources Authority.

(E) Infiltration/inflow (I/I)-Groundwater or storm water which enters a sanitary sewer system.

(F) Initiation of operation-The date when the first major constructed component is capable of being used for its intended purpose.

(G) Intended Use Plan-A planning document, prepared by the Department of Natural Resources, that identifies the intended uses of available funds.

(H) Loan-Unless stated otherwise, loan generally refers to the agreement to lend money to an eligible recipient. The type of agreement could be a loan agreement, bond purchase agreement, or other debt instrument.

(I) Readiness to proceed-The submittal, by the applicant, of a complete engineering report/facility plan and documentation that the applicant has an acceptable debt instrument including any necessary funding commitments from other state and/or federal agencies. A detailed plan may be substituted for a facility plan for requests of planning financial assistance.

(J) Recipient-The recipient of financial assistance from programs supported or secured by the Water and Wastewater Loan Fund (WWLF), the Water and Wastewater Loan Revolving Fund (WWLRF), CWSRF bonds issued by EIERA, or state bond funds.

(K) Staff-Staff of the Missouri Department of Natural Resources.

(L) Treatment works-Refer to the definition in Section 212 of the Federal Water Pollution Control Act.

(M) WWLF-Water and Wastewater Loan Fund. State fund established by the state treasurer pursuant to section 644.122, RSMo.

(N) WWLRF-Water and Wastewater Loan Revolving Fund. State fund under the WWLF into which repayments are held by the state treasurer and from which new loans may be made.

(3) Project Selection Process. This section delineates the process by which the commission selects projects for receipt of CWSRF assistance.

(A) The commission shall hold an annual competition for receipt of CWSRF assistance. This competition will be structured as follows:

1. Applications postmarked or received by the Water Protection Program by the calendar date established in the annual application package will be considered for competitive placement on the annual Intended Use Plan. The deadline will be no sooner than sixty (60) days after the application package is made available. Applications are valid for two (2) annual Intended Use Plan cycles. Applications received after the deadline may be placed on a priority list as determined by the commission based on availability of funds;

2. Applicants that have an outstanding loan balance with the department must be in compliance with the terms and conditions of their assistance agreements to be eligible for additional funding;

3. All qualified applications will be rated and placed on the appropriate list in accordance with 10 CSR 20-4.040(29)(B);

4. The commission will select the projects with the highest priority points, meeting readiness to proceed criteria, for CWSRF assistance from CWSRF funds anticipated to be available during the upcoming fiscal year; and

5. The commission may hold a separate competition for projects seeking funding whenever allowed by federal law and in the event supplemental funds are provided.

(B) The commission may direct projects toward specific financial assistance programs contained in 10 CSR 20-4. The commission's decisions shall be based upon the amount of financial assistance funds available, the amount of financial assistance funds requested, the size of the project, the credit worthiness of the applicant, and the applicant's authority to incur long-term debt.

(4) Target Interest Rate (TIR). The TIR policy shall be established by the Missouri Clean Water Commission in consultation with the department and the EIERA based upon current economic factors, projected fund utilization, deposits in the WWLRF, and actual or anticipated federal capitalization grants, and be published in the annual Intended Use Plan. The department reserves the right to refinance, assign, pledge, or leverage any loans originated under this rule.

(A) A disadvantaged community may receive a reduction in the TIR as determined by the commission. A disadvantaged community is defined, for the purpose of reducing the TIR, as an applicant that-

1. Has a population of three thousand three hundred (3,300) or less based on the most recent decennial census;

2. Has a median household income at or below seventy-five percent (75%) of the state average median household income as determined by the most recent decennial census or by an income survey overseen by a state or federal agency; and

3. Has an average wastewater user charge for five thousand (5,000) gallons that is at least two percent (2%) of the median household income of the applicant, determined by the decennial census or income survey listed in (4)(A)2.

(B) Additional Subsidization. Additional subsidization (such as principal forgiveness, negative interest loans, grants, or the like) may be provided as the Federal Water Pollution Control Act as amended, or any subsequent federal act, requires or allows.

(C) In accordance with section 603(d)(1)(A) of the Federal Water Pollution Control Act, the term of the assistance agreement shall be established per the provisions in 10 CSR 20-4.041(8)(A).

(5) Loan Fees. The department may charge annual loan administrative fees not to exceed one-half percent (0.5%) of the outstanding loan balance of each loan for loan origination, loan servicing and administration of the program. Other loan expenses including, but not limited to, cost of issuance, debt service reserve and expenses charged by the paying agent will be paid by the recipient.

(6) Additional Administrative Fees Allowed. Additional administrative fees may be assessed by the department at the time the administration fee is calculated for failure by a recipient to pay debt service on the loan or submit approved documents to the department (for example, operation and maintenance manuals, enacted user charge and sewer use ordinances, executed contract documents) in accordance with the time frames provided under the program agreement entered into by the recipient. The additional fee will be an additional one-tenth percent (0.1%) per month that the recipient remains delinquent. The additional fee for delinquent documents will be collected only during the year in which the document is not submitted.

(7) General CWSRF Assistance Requirements. The commission will prioritize potential CWSRF projects by assigning priority points in accordance with the CWSRF Priority Point Criteria established per subsection (29)(A) of this rule.

(A) Municipalities, counties, public sewer or water districts, or both, political subdivisions or instrumentalities of the state, and combinations of the same, or any entity eligible pursuant to the Federal Water Pollution Control Act as amended, are eligible for CWSRF assistance. The recipient must demonstrate its legal, institutional, managerial, and financial capability to ensure adequate operation and maintenance of the wastewater treatment works throughout the recipient's jurisdiction.

(B) Financial Disclosure. Applicants shall provide upon request to the department and the EIERA any detailed financial information as may be required by the commission, the department, the EIERA, or its financial or legal consultants to determine the applicant's eligibility for the financial assistance.

(C) For equivalency projects, the recipient and its contractors must comply with all requirements associated with funds provided under 40 CFR 35.3145.

(D) If the department determines that an applicant is in significant noncompliance with a valid National Pollutant Discharge Elimination System (NPDES) permit or Missouri State Operating Permit, the Federal Water Pollution Control Act as amended, the Missouri Clean Water Law as amended, or implementing regulations, then the department may refuse to provide financial assistance to such applicant, or require the applicant to reach a binding agreement regarding corrective actions the applicant will take to address such noncompliance.

(E) All recipients are encouraged to retain the services of a financial advisor who is registered with the U.S. Securities Exchange Commission.

(F) American Iron and Steel. Recipients will need to keep supporting documentation to show that iron and steel products used comply with the requirements of 33 U.S.C. 1388 and subsection (17)(N) of this rule unless a waiver has been received.

(8) Application Requirements. Applicants must submit a completed application form including the information listed in subsections (8)(A)-(C) to be included on the Intended Use Plan. Potential applicants are strongly encouraged to meet with department staff prior to submitting an application.

(A) A project summary which includes:

1. The need for the project;

2. The project components, including maps or drawings showing the project location and layout; and

3. A cost estimate including a cost breakdown.

(B) The most recent financial statement; and

(C) Proposed project schedule.

(9) Facility Planning. All facility plans must be in accordance with 10 CSR 20-8.110.

(A) Requirements for all projects are as follows:

1. The most reasonable environmentally sound and implementable waste management alternatives must be studied and evaluated. Proposed waste treatment management plans and practices shall provide for the most cost effective technology that can treat waste-water and I/I to meet the current 10 CSR 20-7.015 Effluent Regulations, and 10 CSR 20-7.031 Water Quality Standards;

2. An estimate of the average user charge including documentation for the basis of the estimate; and

3. An assessment of the environmental conditions and impact of the proposed project on the environment is required. The environmental review process and associated public notice requirements are contained in 10 CSR 20-4.050. Additional public participation requirements are outlined in subsections (14)(A) and (B).

(B) Recipients meeting the definition of municipality or inter-municipal, interstate or state agency shall provide a certification with the facility plan that it complies with cost and effectiveness requirements found in Section 602(b)(13) of the Federal Water Pollution Control Act.

(10) Additional Preclosing Requirements.

(A) Submittal Deadline. All documents necessary to provide assistance must be submitted to the department in sufficient time, as agreed upon in the project schedule, to allow adequate time for review and approval prior to the loan closing date established by the department.

(B) Final Document Submittal. Documents listed in paragraphs (10)(B)1.-9. must be submitted and accepted by the department:

1. Resolution identifying the authorized representative by name. Applicants shall provide a resolution by the governing body designating a representative authorized to file the application for assistance, reimbursement requests, and act in behalf of the applicant in all matters related to the project;

2. Plans and specifications certified by a registered professional engineer licensed in Missouri;

3. If engineering services are to be reimbursed, an engineering contract as described in section (12) and the appropriate procurement documentation as described in section (13);

4. If applicable, the design-build contract per section (26) and the appropriate procurement documentation;

5. Adopted user charge ordinance as described in section (16);

6. Enacted sewer use ordinance as described in section (16);

7. Proposed project schedule. The following represents the minimum requirements for the project schedule:

A. Construction start defined as date of issuance of notice to proceed;

B. Construction completion;

C. Initiation of operation; and

D. Project completion;

8. Certification of easements and real property acquisition. Recipients of assistance under the CWSRF shall have obtained title or option to the property or easements or condemnation proceedings initiated for the project prior to award of financial assistance; and

9. Other information or documentation deemed necessary by the department to ensure the proper expenditure of state funds.

(11) Accounting and Audits. Recipients are required to have a dedicated source for repayment of any loans and an adequate financial management system and audit procedure for the project which provides efficient and effective accountability and control of all property, funds, and assets related to the project. The recipient's financial system is subject to state or federal audits to assure fiscal integrity of public funds.

(A) Each recipient is expected to have an adequate accounting system for the project which provides efficient and effective accountability and control of all property, funds, and assets.

1. The recipient is responsible for maintaining a financial management system which will adequately provide for an accurate, current, and complete disclosure of the financial results of each loan project. The proprietary fund (business-related fund) accounting will be in accordance with generally accepted government accounting principles and practices, regardless of the source of funds.

2. An acceptable accounting system includes books and records showing all financial transactions related to the construction project. The system must document all receipt and disbursement transactions, and group them by type of account (for example, asset, revenue, expense, etc.) and by individual expense account (for example, personnel salaries and wages, subcontract costs, etc.).

3. The recipient shall maintain books, records, documents, and other evidence and accounting procedures and practices, sufficient to reflect properly the amount, receipt, and disposition by the recipient for all assistance received for the project and the total costs of the project of whatever nature incurred for the performance of the project for which the assistance was awarded.

(B) Annual Audited Financial Statements.

1. The recipient shall cause an audit of the recipient's annual financial report for the preceding fiscal year to be made by a certified public accountant or firm of certified public accountants employed for that purpose.

A. The annual audit will cover in reasonable detail the operation of the proprietary system during the fiscal year.

B. Within one hundred eighty (180) days after the end of the recipient's fiscal year, a copy of the annual financial report will be submitted to the department as long as the recipient is in loan repayment status. A recipient who cannot meet this deadline will notify the department in writing of the delay with the expected date of completion.

2. As required by federal law, a recipient must comply with the provisions of OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as amended, governing the audit of state and local governments. When applicable, a copy of this audit, including all written comments and recommendations of the accountant, will be furnished to the department within the time period as provided in OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

(12) Architectural or Engineering Contracts. The following represents the minimum requirements for the architectural or engineering contracts:

(A) General Requirements for Contracts.

1. Be necessary for and directly related to the accomplishment of the project work.

2. Be a lump sum or cost plus fixed fee contract in the form of a bilaterally executed written agreement.

3. Be for monetary consideration.

4. Not be in the nature of a grant or gift.

5. State a time frame for performance.

6. State a cost which cannot be exceeded except by amendment.

7. State provisions for payment; and

(B) The nature, scope, and extent of work to be performed during construction should include, but not be limited to, the following:

1. Preparing an operation and maintenance manual if required by the department and as defined in subsection (22)(A);

2. Assisting the recipient in bid letting;

3. Assisting the recipient in reviewing and analyzing construction bids and making recommendations for award; and

4. Inspecting during construction to ensure conformance with the construction contract documents unless waived by the department.

(C) Executed Engineering Contract Submittal. The final approved executed engineering contract must be submitted prior to the first reimbursement request.

(13) Procurement of Engineering Services. The procurement of engineering services shall be in accordance with sections 8.285 through 8.291, RSMo, unless such engineering services are performed as part of a design-build contract pursuant to section (26).

(14) Public Participation. Public participation must be preceded by timely distribution of information and occur sufficiently in advance of decision making to allow the recipient to assimilate public views into action. Public participation shall include the following:

(A) Prior to approval of the draft user charge ordinance, a public hearing, in accordance with section 250.233, RSMo, shall be conducted to specifically address the proposed user charge rates.

(B) Public notice of the hearing shall be published at least thirty (30) days prior to the meeting date. Public hearing notices shall include the date, time and place of the hearing. The notice may be for multiple hearings and should include a separate starting time for each hearing. The recipient shall prepare a transcript, recording, or other complete record of the proceeding and submit it to the department and make it available at no more than cost to anyone who requests it. A copy of the record should be available for public review; and

(C) Public participation requirements for environmental review are contained in 10 CSR 20-4.050(4)(B) 2.

(15) Intermunicipal Agreements. Prior to closing, if the project serves two (2) or more public entities, the applicant shall submit executed agreements or contracts between the public entities for the financing, construction and operation of the proposed treatment facilities. At a minimum, the agreement or contract will include:

(A) The operation and maintenance responsibilities of each party upon which the costs are allocated;

(B) The formula by which the costs are allocated;

(C) The manner in which the costs are allocated;

(D) The term of the agreement, which shall be, at a minimum, for the term of the loan;

(E) The method for resolution or arbitration of disputes;

(F) The procedure for amending or renegotiating the agreement;

(G) The enforcement authority; and

(H) The effective date of the agreement.

(16) User Charge and Sewer Use Ordinance. Recipients are required to maintain, for the useful life of the treatment works, user charge and sewer use ordinances approved by the department. User charge and sewer use ordinances, at a minimum, shall be adopted prior to financing and implemented by the initiation of operation of the financed wastewater treatment works.

(A) The user charge system must be designed to produce adequate revenues required for the operation and maintenance, including a reserve for equipment replacement. A one hundred ten percent (110%) debt service reserve may be required. The sewer user rate for operation and maintenance, including replacement, shall be proportional and based upon actual use. Each user charge system must include an adequate financial management system that will accurately account for revenues generated by the system, debt service, and loan fee costs and expenditures for operation and maintenance, including replacement based on an adequate budget identifying the basis for determining the annual operation and maintenance costs and the costs of personnel, material, energy, and administration. The user charge system shall provide that the costs of operation and maintenance for all flow not directly attributable to users be distributed equally among the users. The system shall provide for an annual review of charges. A user charge system shall be adopted by all municipalities (as defined in 40 CFR 35.2005(b)(27) receiving waste treatment services if required by federal law.

(B) Low Income Residential User Rates.

1. Recipients may establish lower user charge rates for low income residential users after providing for public notice and hearing, in accordance with section 250.233, RSMo. The criteria used to determine a low income residential user must be clearly defined.

2. The costs of any user charge reductions afforded a low income residential class must be proportionately absorbed by all other user classes. The total revenue for operation and maintenance (including equipment replacement) of the facilities, and debt retirement must not be reduced as a result of establishing a low income residential user class.

(C) The sewer use ordinance shall prohibit any new connections from inflow sources into the treatment works and require that new sewers and connections to the treatment works are properly designed and constructed. The ordinance also shall require that all wastewater introduced into the treatment works not contain toxic or other pollutants in amounts or concentrations that endanger public safety and physical integrity of the treatment works; cause violation of effluent or water quality limitations; preclude the selection of the most cost-effective alternative for wastewater treatment and sludge disposal; or inhibit the performance of a pretreatment facility. The ordinance shall require all users to connect to the system within ninety (90) days of service availability.

(17) Specifications. The construction specifications must contain the features listed in the following:

(A) Recipients must incorporate in their specifications a clear and accurate description of the technical requirements for the material, product, or service to be procured. The description, in competitive procurements, shall not contain features which unduly restrict competition unless the features are necessary to test or demonstrate a specific thing or to provide for interchangeability of parts and equipment. The description shall include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use;

(B) The recipient shall avoid the use of detailed product specifications if at all possible;

(C) When in the judgment of the recipient it is impractical or uneconomical to make a clear and accurate description of the technical requirements, recipients may use a "brand name or equivalent" description as a means to define the performance or other salient requirements of an item to be procured. The recipient need not establish the existence of any source other than the named brand. Recipients must state clearly in the specification the salient requirements of the named brand to be met by offerers and that other brands may be accepted;

(D) Sole Source Restriction. A specification shall not require the use of structures, materials, equipment, or processes which are known to be available only from a sole source, unless the department determines that the recipient's engineer has adequately justified in writing to the department that the proposed use meets the particular project's minimum needs;

(E) Experience Clause Restriction. The general use of experience clauses is restricted to special cases.

1. The general use of experience clauses requiring equipment manufacturers to have a record of satisfactory operation for a specified period of time or of bonds or deposits to guarantee replacement in the event of failure is restricted to special cases where the recipient's engineer adequately justifies any such requirement in writing. Where this justification has been made, submission of a bond or deposit shall be permitted instead of a specified experience period. The period of time for which the bond or deposit is required shall not exceed the experience period specified.

2. The general use of experience clauses requiring contractors to have a record of satisfactory experience for a specified period of time or the completion of a specified number of similar projects is restricted to special cases where the recipient's engineer adequately justifies any such requirement in writing. Such justification shall not unduly restrict competition or result in excessive bonding requirements. Where this justification has been made, submission of a bond or deposit shall be permitted instead of the specified experience. The period of time for which the bond or deposit is required shall not exceed the experience period specified;

(F) Domestic Products Procurement Law. In accordance with sections 34.350-34.359, RSMo, the bid documents shall require all manufactured goods or commodities used or supplied in the performance of any contract or subcontract awarded on a loan project to be manufactured, assembled, or produced in the United States, unless obtaining American- made products would increase the cost of the contract by more than ten percent (10%);

(G) Bonding. On construction contracts exceeding fifty thousand dollars ($50,000), the bid documents shall require each bidder to furnish a bid guarantee equivalent to five percent (5%) of the bid price. In addition, the bid documents must require the successful bidder to furnish performance and payment bonds, each of which shall be in an amount not less than one hundred percent (100%) of the contract price;

(H) State Wage Determination. The bid documents shall contain the current prevailing wage determination issued by the Missouri Department of Labor and Industrial Relations, Division of Labor Standards as established by sections 290.210 to 290.340, RSMo;

(I) Davis-Bacon Wage Requirements. Construction of treatment of works must comply with the Davis-Bacon requirements in accordance with 29 CFR 5.5. The current Davis-Bacon wage rate from the United States Department of Labor must be incorporated in the bid documents;

(J) Small, Minority, Women's, and Labor Surplus Area Businesses. The recipient shall comply with 2 CFR 200.321 and 40 CFR part 33;

(K) Debarment/Suspension. The recipient agrees to follow 2 CFR part 180 subpart C and 2 CFR 200.213. The recipient acknowledges that doing business with any party listed on the List of Debarred, Suspended or Voluntarily Excluded Persons may result in disallowance of project costs under the assistance agreement;

(L) Right of entry to the project site must be provided for representatives of the Missouri Department of Natural Resources, Clean Water Commission, and the EIERA so they may have access to the work wherever it is in preparation or progress. Proper facilities must be provided for access and inspections;

(M) The specifications must include the following statement: "The owner shall make payment to the contractor in accordance with section 34.057, RSMo."; and

(N) American Iron and Steel. Specifications shall adhere to requirements under 33 U.S.C. 1388 for projects involving the construction, alteration, maintenance, or repair of a treatment works.

(18) Construction Equipment and Supplies Procurement. This section describes the minimum procurement requirements which the recipient must use under the CWSRF program. The recipient must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference.

(A) Small Purchases. A small purchase is the procurement of materials, supplies, and services when the aggregate amount involved in any one (1) transaction does not exceed one hundred fifty thousand dollars ($150,000). The small purchase limitation of one hundred fifty thousand dollars ($150,000) applies to the aggregate total of an order, including all estimated handling and freight charges, overhead, and profit to be paid under the order. In arriving at the aggregate amount involved in any one (1) transaction, all items which should properly be grouped together must be included. Department concurrence and a minimum of three (3) quotes must be obtained prior to purchase.

(B) Bidding Requirements. This subsection applies to procurement of construction equipment, supplies, and construction services in excess of one hundred fifty thousand dollars ($150,000) awarded by the recipient for any project. No contract shall be awarded until the department has approved the formal advertising and bidding.

1. Formal advertising.

A. Adequate public notice. The recipient will cause adequate notice to be given of the solicitation by publication in newspapers of general circulation beyond the recipient's locality (preferably statewide), construction trade journals, or plan rooms, inviting bids on the project work and stating the method by which bidding documents may be obtained or examined.

B. Adequate time for preparing bids. A minimum of thirty (30) days shall be allowed between the date when public notice, publication, insertion, or document available in a plan room is first published or provided and the date by which bids must be submitted. Bidding documents shall be available to prospective bidders from the date when the notice is first published or provided. Recipients are encouraged to directly solicit bids from prospective bidders.

2. Bid document requirements and procedure. The recipient shall prepare a reasonable number of bidding documents (invitations for bids) and shall furnish them upon request on a first-come, first-served basis. The recipient shall maintain a complete set of bidding documents and shall make them available for inspection and copying by any party. The bidding documents shall include, at a minimum:

A. A complete statement of the work to be performed or equipment to be supplied and the required completion schedule;

B. The terms and conditions of the contract to be awarded;

C. A clear explanation of the method of bidding and the method of evaluation of bid prices and the basis and method for award of the contract or rejection of all bids;

D. Responsibility requirements and criteria which will be employed in evaluating bidders;

E. The recipient shall provide for bidding by sealed bid and for the safeguarding of bids received until public opening;

F. If a recipient desires to amend any part of the bidding documents during the period when bids are being prepared, addenda shall be communicated in writing to all firms which have obtained bidding documents in time to be considered before the bid opening time. All addenda must be approved by the department prior to award of the contract;

G. A firm which has submitted a bid shall be allowed to modify or withdraw its bid before the time of bid opening;

H. The recipient shall provide for a public opening of bids at the place, date, and time announced in the bidding documents. Bids received after the announced opening time shall be returned unopened;

I. The recipient may reserve the right to reject all bids. Unless all bids are rejected for good cause, award shall be to the lowest, responsive, responsible bidder.

(I) After bids are opened, the recipient shall evaluate them in accordance with the methods and criteria set forth in the bidding documents.

(II) The recipient shall award contracts only to responsible contractors that possess the potential ability to perform successfully under the terms and conditions of a proposed contract. A responsible contractor is one that has financial resources, technical qualifications, experience, organization, and facilities adequate to carry out the contract or a demonstrated ability to obtain these. The recipient shall have established protest provisions in the specifications. These provisions shall not include the department as a participant in the protest procedures.

(III) If the recipient intends to make the award to a firm which did not submit the lowest bid, the recipient shall prepare a written statement before any award, explaining why each lower bidder was deemed non-responsible or nonresponsive and shall retain the statements in its files.

(IV) The recipient shall not reject a bid as nonresponsive for failure to list or otherwise indicate the selection of subcontractor(s) or equipment unless the recipient has clearly stated in the solicitation documents that the failure to list shall render a bid non-responsive and cause rejection of a bid; and

J. Departmental concurrence with contract award must be obtained prior to actual contract award. Recipients shall notify the department in writing of each proposed construction contract which has an aggregate value over the one hundred fifty thousand dollars ($150,000). The recipient shall notify the department within ten (10) calendar days after the bid opening for each construction sub agreement. The notice shall include:

(I) Proof of advertising;

(II) Tabulation of bids;

(III) The bid proposal from the bidder that the recipient wishes to accept, including justification if the recommended successful bidder is not also the lowest bidder;

(IV) Recommendation of award;

(V) Any addenda not submitted previously and bidder acknowledgment of all addenda;

(VI) Copy of the bid bond or bid guarantee;

(VII) One (1) set of as-bid specifications;

(VIII) Suspension/Debarment Certification;

(IX) Certification that the recipient has the necessary funds to complete the project if bids exceed available CWSRF funding;

(X) MBE/WBE Worksheet;

(XI) Recipient's statement that proposed contractor(s) positive efforts, MBE/WBE utilization, or both, have been reviewed and meet regulatory requirements;

(XII) Site certification, if not previously submitted; and

(XIII) Certification of Non-segregated Facilities.

(19) Changes in Contract Price or Time. The contract price or time may be changed only by a change order. The value of any work covered by a change order or of any claim for increase or decrease in the contract price shall be determined by the methods set forth in the following:

(A) Unit Prices.

1. Original bid items. Unit prices previously approved are acceptable for pricing changes of original bid items. However, when changes in quantities exceed fifteen percent (15%) of the original bid quantity and the total dollar change of that bid item is greater than twenty-five thousand dollars ($25,000), the recipient shall review the unit price to determine if a new unit price should be negotiated.

2. New items. Unit prices of new items shall be negotiated;

(B) A lump sum to be negotiated; and

(C) Cost Reimbursement. The actual cost for labor, direct overhead, materials, supplies, equipment, and other services necessary to complete the work plus an amount to cover the cost of general overhead and profit.

(20) Progress Payments to Contractors.

(A) It is the commission's policy that recipients should make prompt progress payments to prime contractors and prime contractors should make prompt progress payments to subcontractors and suppliers for eligible construction, supplies, and equipment costs.

1. For purposes of this section, progress payments are defined as follows:

A. Payments for work in place; and

B. Payments for materials or equipment which have been delivered to the construction site or which are stockpiled in the vicinity of the construction site in accordance with the terms of the contract, when conditional or final acceptance is made by or for the recipient. The recipient shall assure that items for which progress payments have been made are adequately insured and are protected through appropriate security measures.

(B) Appropriate provisions regarding progress payments must be included in each contract and subcontract.

(C) Retention from Progress Payments. The recipient may retain a portion of the amount otherwise due the contractor. The amount the recipient retains shall be in accordance with section 34.057, RSMo.

(21) Classification of Costs. The information in this section repre- sents policies and procedures for determining the eligibility of project costs for assistance under programs supported by this regulation and 40 CFR part 35 subpart I, including Appendix A.

(A) General. All project costs will be eligible if they meet the following tests:

1. Reasonable and cost effective;

2. Necessary for the construction of an operable wastewater facility and other projects, as defined in the Federal Water Pollution Control Act as amended, including required mitigation; and

3. Meet the eligibility limitations of the Federal Water Pollution Control Act as amended.

(B) Eligible Costs. Eligible costs include, at a minimum:

1. Engineering services and other services incurred in planning and in preparing the design drawings and specifications for the project. For invoice reimbursement, the department must have a copy of the executed engineering contract for planning and design of the project;

2. The cost incurred pursuant to a contract for building those portions of the project which are for treatment of wastewater, correction of I/I, or for new interceptor sewers. These costs include change orders within the allowable scope of the project and the costs of meritorious contractor claims for increased costs under sub agreements;

3. The reasonable cost of engineering services incurred during the building and initial operation phase of the project to ensure that it is built in conformance with the design drawings and specifications. A registered professional engineer licensed in Missouri or a person under the direction and continuing supervision of a registered professional engineer licensed in Missouri must provide inspection of construction for the purpose of assuring and certifying compliance with the approved plans and specifications. Eligible construction phase and initial operation phase service are limited to

A. Office engineering;

B. Construction surveillance;

C. Stakeout surveying;

D. As-built drawings;

E. Special soils/materials testing;

F. Operation and maintenance manual;

G. Follow-up services and the cost of start-up training for operators of mechanical facilities constructed by the project to the extent that these costs are incurred prior to this department's final inspection. Costs shall be limited to on-site operator training tailored to the facilities constructed or on- or off-site training may be provided by the equipment manufacturer if this training is properly procured;

H. User charge and sewer use ordinance; and

I. Plan of operation;

4. Demolition costs. The reasonable and necessary cost of demolishing publicly owned WWTF's which are no longer utilized for wastewater collection, transportation, or treatment purposes. The reasonable and necessary cost of demolishing privately-owned WWTF's which will be eliminated or replaced by a publicly-owned treatment works if the proposed elimination was addressed in the approved facility plan. Generally, these costs will be limited to the demolition and disposal of the structures, removal and disposal of biosolids, final grading, and seeding of the site;

5. Equipment, materials, and supplies.

A. The cost of a reasonable inventory of laboratory chemicals and supplies necessary to initiate plant operations and laboratory items necessary to conduct tests required for plant operation.

B. Cost of shop equipment installed at the treatment works necessary to the operation of the works.

C. The costs of necessary safety equipment, provided the equipment meets applicable federal, state, local, or industry safety requirements.

D. The costs of mobile equipment necessary for the operation of the overall wastewater treatment facility, transmission of waste-water or sludge, or for the maintenance of equipment. These items include:

(I) Portable standby generators;

(II) Large portable emergency pumps to provide pump-around capability in the event of pump station failure or pipeline breaks; and

(III) Trailers and other vehicles having as their purpose the transportation, application, or both, of liquid or dewatered sludge or septage;

E. The cost of a reasonable inventory of replacement parts identified and approved in advance for new wastewater treatment facilities;

6. Land or easements required to complete the project. In order to be eligible for reimbursement, land must be purchased in accordance with the Uniform Relocation and Real Property Acquisition Policies Act of 1970, P.L. 91-646, as amended. Certification by the recipient of compliance under this Act is required;

7. The cost of I/I correction, other than normal maintenance costs, and treatment works capacity adequate to transport and treat I/I;

8. Purchase of a private wastewater system, provided the project will eliminate or upgrade the existing facilities. The purchase of a private wastewater system must be purchased in accordance with the Uniform Relocation and Real Property Acquisition Policies Act of 1970, P.L. 91-646, as amended. Certification by the recipient of compliance under this Act is required;

9. The cost of preparing environmental documentation required under 10 CSR 20-4.050;

10. Nonpoint source projects as identified in the most current Missouri Nonpoint Source Management Plan;

11. Construction permit application fees, costs of issuance, capitalized interest, and contracted project administration costs;

12. Debt service reserve deposits;

13. Collector sewers provided that they meet the requirements of either-

A. For major rehabilitation or replacement of collection sewers that are needed to assure the total integrity of the system; or

B. New collector sewers for existing communities where sufficient treatment capacity exists or adequate treatment will be available when collectors are completed;

14. Correction of combined sewer overflows;

15. House laterals if they lie within the public easement and will be maintained by the recipient;

16. Storm water transport and treatment systems, and non-point source best management practices;

17. Third party costs, incurred under a contract, associated with preparing a fiscal sustainability plan;

18. Energy conservation projects that reduce energy consumption including energy efficient equipment and certain renewable energy facilities;

19. Water conservation projects that reduce demand for publicly-owned water treatment works including water meters, water efficient appliances, education programs, and incentive programs; and

20. Planning and assessments activities including asset management plans, capital improvement plans, integrated planning, long term control plans, water or energy audits, treatment works security and safety plans, or environmental management systems.

(C) Non-eligible costs include, but are not limited to:

1. Costs for the purposes in paragraphs (21)(B)6. and (21)(B)8. that are in excess of just compensation based on the appraised value or amount determined in condemnation;

2. Ordinary operating expenses of the recipient including salaries and expenses of elected and appointed officials, preparation of routine financial reports and studies, EIERA application fees, and the state operating permit fees or other such permit fees necessary for the normal operation of the constructed facility;

3. Preparation of applications and permits required by federal, state, or local regulations or procedures;

4. Administrative, engineering, and legal activities associated with the establishment of special departments, agencies, commissions, regions, districts, or other units of government;

5. Personal injury compensation or damages arising out of the project;

6. Fines and penalties due to violations of, or failure to comply with, federal, state, or local laws, regulations, or procedures;

7. Costs outside the scope of the approved project;

8. Costs for which grant or loan payments have been or will be received from another state or federal agency; and

9. Force account work.

(22) Operation and Maintenance.

(A) Operation and Maintenance Manual. The recipient must make provision satisfactory to the department for assuring effective operation and maintenance of the constructed project throughout its design life. If required by the department, recipients of assistance for construction of mechanical facilities must develop an operation and maintenance manual. The operation and maintenance manual, if required, must be submitted by eighty percent (80%) construction completion.

(B) Start-Up Training. At fifty percent (50%) construction completion, a start-up training proposal (if required) and proposed follow-up services contract must be submitted. This contract must be approved by ninety percent (90%) construction completion.

(C) Wastewater Operator. The recipient must make provision satisfactory to the department for assuring that qualified wastewater operator and maintenance personnel are hired in accordance with an approved schedule. Qualified personnel shall be those meeting the requirements established under 10 CSR 20-9.020.

(23) Retention of Records.

The recipient must retain all records according to the retention schedules established by chapter 109, RSMo. A longer retention period may be required under the loan documentation.

(24) Conflict of Interest. No employee, officer, or agent of the recipient shall participate in the selection, award, or administration of a sub agreement supported by state or federal funds if a conflict of interest, real or apparent, would be involved.

(A) This conflict would arise when-

1. Any employee, officer, or agent of the recipient, any member of their immediate families or their partners have a financial or other interest in the firm selected for a contract; or

2. An organization which may receive or has been awarded a sub agreement employs, or is about to employ, any person under paragraph (24)(A)1.

(B) The recipient's officers, employees, or agents shall neither solicit nor accept gratuities, favors, or anything of substantial monetary value from contractors, potential contractors, or other parties to sub agreements.

(25) Disposition of Treatment Works. The recipient must receive the written consent of the department prior to the disposal of the wastewater treatment works or any material part thereof financed or refinanced with the proceeds of a loan.

(A) If at any time during the term of the loan a recipient desires to sell, lease, mortgage, or otherwise dispose of the waste-water treatment works or any part thereof, the recipient shall abide by the provisions for disposal as contained in the recipient's loan documentation between the recipient and the department. Disposition of treatment works to entities not listed in subsection (7)(A) of this rule will require immediate repayment of assistance.

(B) During the loan repayment term, ownership of facilities, equipment, and real property purchased under the program with a current value in excess of five thousand dollars ($5,000) may be transferred only with written permission of the department.

(C) If at any time after initiation of operations of the project, the wastewater treatment works funded with a CWSRF grant, or any part thereof, is sold, either outright or on contract for deed, to other than a political subdivision of the state, the state shall receive reimbursement of the grant funds. The total amount of grant funds to be reimbursed shall be based on a straightline depreciation based on the original costs of the facilities being sold, the original loan repayment period or a 20-year straight-line depreciation schedule in the event of grant only funds, and adjusted for the percentage of grant funds originally disbursed to fund such facilities. Grant funds to be reimbursed shall become due and payable upon transfer of ownership.

(26) Procurement of Design-Build Services. The procurement of design-build services shall be in accordance with section 67.5060, RSMo. Recipients that are exempt from section 67.5060, RSMo may also utilize design-build services if local ordinances or policies allow design-build and the procurement of the design-build team considers both the qualifications of the team and the project selected meets the cost effectiveness requirements of subsection (10)(B). Recipients seeking funds for a project utilizing design-build services must notify the department with the recipient's CWSRF application. Recipients that utilize design-build services shall coordinate procurement activities with the department to ensure compliance with CWSRF requirements. The department may restrict the amount of funding available for projects using design-build services, if needed to comply with federal law and regulations.

(27) Plan of Study. Facility planning loans, not to exceed a five (5) year repayment term, or grants may be provided by the commission to applicants with an existing publicly owned wastewater system. Applicants that desire to receive a loan for facility planning must submit a plan of study. The plan of study should include the following information (generally in fifteen (15) pages or less):

(A) Maps of the planning area showing boundaries, political jurisdictions, river basins and surface water bodies, and service areas of existing wastewater treatment facilities; NPDES permits; the existing population; a brief description of existing wastewater facilities; and the communities and major industries served;

(B) The agencies and jurisdictions involved in the planning. Include any joint resolutions or agreements among jurisdictions that designate a lead agency or official to serve as applicant;

(C) The nature and scope of planning, including a description of the need for the project, and facilities planning tasks and schedule; and

(D) The nature and scope of planning, including a description of the need for the project, and facilities planning tasks and schedule; and.

(28) Fiscal Sustainability Plan. A fiscal sustainability plan as established in section 603(d)(1)(E) of the Federal Water Pollution Control Act, shall be prepared by the recipient receiving a loan for a treatment works repair, replacement, or expansion. For purposes of this paragraph "loan" does not include an agreement where the department is purchasing an obligation (e.g. municipal bonds) from the recipient.

(29) Intended Use Plan

(A) The priority point criteria will be published in draft form annually and be adopted by the commission after a public comment period has been conducted. The adopted priority point criteria will be published on the department's website.

(B) Priority Lists. Each year, following a public hearing, the commission shall establish priority lists for using future anticipated state and federal funding allocations. These lists shall contain at a minimum several parts, as described in subsections (B)1. through (B)4. of this rule. These lists shall become effective annually with the adoption of the Intended Use Plan. However, the commission may bypass projects on these lists for failure to proceed to grant award or loan closing in an expeditious manner.

1. Fundable List. The commission may establish one or more fundable priority lists which identify those projects which meet the readiness to proceed criteria. The commission may specify fund allocations across multiple fundable priority lists in order to distribute available funds statewide and meet CWSRF program goals. Projects will be listed in priority point order within each fundable list.

2. Fundable Contingency Priority List. The fundable contingency priority list identifies those projects meeting the readiness to proceed criteria, however, there are insufficient available funds. Projects will be listed in priority point order regardless of the date which the readiness to proceed criteria are met.

3. Contingency Priority List. The contingency priority list identifies those projects which may be considered for funding during a given fiscal year if the applicant secures an acceptable debt instrument. Projects will not be considered for the contingency priority list unless a complete facility plan has been submitted for review.

4. Planning List. The planning list identifies all potentially eligible grant or loan projects not contained on a fundable or contingency priority list. Planning list projects may advance to the contingency or fundable lists, with commission approval, upon meeting the readiness to proceed criteria.

(C) Modifications. After the commission adopts the Intended Use Plan, it may modify the priority lists or redistribute the available funds in accordance with subsections (C)1. through (C)4. of this rule. The commission may only take this action after providing notice to those projects directly affected.

1. Inadequate Allocations. If the actual funding is less than the allocations anticipated by the commission in the development of the Intended Use Plan, or if previous allocations are reduced, the commission may find it necessary to reduce their commitments to projects on the fundable lists. The commission may take formal action to reduce the number of commitments in accordance with paragraphs (C)1.A. through (C)1.C. of this rule.

A. The commission may reduce the amount of funds allocated to each purpose as shown in the Intended Use Plan.

B. The commission may remove the lowest priority projects from the fundable priority lists, placing these projects on the appropriate contingency priority list in a position dictated by their priority relative to others on that contingency priority list.

C. The commission may bypass projects on the fundable priority lists in accordance with subsection (C)3. of this rule.

2. Unanticipated and Uncommitted Funds. If unanticipated or uncommitted funds become available, the commission may take formal action to distribute them in accordance with paragraphs (C)2.A. through (C)2.C. of this rule.

A. The commission may use the unanticipated or uncommitted funds to move the highest priority project(s) from contingency priority list to the proper fundable priority list.

B. The commission may use the unanticipated or uncommitted funds to increase the amount of funds allocated to the various purposes as shown in the Intended Use Plan.

C. The commission may use the unanticipated or uncommitted funds to increase the amount of funds allocated to projects on the fundable priority list or to provide increased assistance to projects which have already received assistance.

3. Project Bypass. The commission may bypass any project on the fundable priority list which is not, in the commission's opinion, making satisfactory progress in satisfying requirements for assistance. Bypassed projects will be removed from the fund-able priority list and placed on the proper contingency priority or planning list in a position dictated by the commission. In determining whether a project is making satisfactory progress in satisfying the requirements for assistance, the commission shall use the criteria contained in paragraphs (C)3.A. through (C)3.C. of this rule. The commission may reinstate any bypassed projects on the fundable priority lists after first giving notice to applicants for those projects on the contingency lists of the commission's intent to reinstate bypassed projects. Funds released through project bypass will be considered uncommitted and available for distribution in accordance with subsection (C)2. of this rule.

A. Any project on the fundable lists may be bypassed if the applicant fails to submit all documents required for assistance at least sixty (60) days prior to the quarter for which assistance is anticipated.

B. The commission may use individual project schedules developed by the department to determine whether a project on the current fundable list is making satisfactory progress at those times during the fiscal year.

C. Carryover projects may be automatically bypassed if they do not have all documents required for assistance submitted three (3) months before the end of the federal fiscal year in which their application expires.

4. Project Removal. The department will remove projects from the contingency, fundable, or planning lists if they meet any one (1) of the criteria stated in paragraphs (C)4.A. through (C)4.E. of this rule.

A. The department will remove a project if it has received one (1) or more funding commitments necessary to cover the estimated project cost or has been fully funded by other funding sources.

B. The department will remove a project if it is determined to be ineligible for funding.

C. The department will remove projects from these lists if directed by commission action under subsections (C)1. or (C)3. of this rule.

D. The department will remove projects from these lists if directed to do so by the Environmental Protection Agency in accordance with federal law.

E. The department will remove a project from these lists at the request of the applicant.

10 CSR 20-4.040

AUTHORITY: sections 644.026 and 644.121, RSMo 2000 and section 644.101, RSMo Supp. 2009.* Original rule filed Sept. 13, 1988, effective 2/14/1989. Amended: Filed April 2, 1990, effective 9/28/1990. Emergency amendment filed July 17, 1990, effective 7/30/1990, expired 11/26/1990. Amended: Filed Sept. 4, 1991, effective 2/6/1992. Amended: Filed March 4, 1993, effective 9/9/1993. Amended: Filed April 14, 1994, effective 11/30/1994. Amended: Filed March 1, 1996, effective 11/30/1996. Amended: Filed May 28, 2009, effective 2/28/2010.

Amended by Missouri Register January 2, 2019/Volume 44, Number 1, effective 2/28/2019

*Original authority: 644.026, RSMo 1972, amended 1973, 1987, 1993, 1995, 2000; 644.101, RSMo 1972, amended 1973, 1982, 1987, 1991, 1993, 1998, 2000, 2009; and 644.121, RSMo 1972, 1973, 1987, 1991.